Statement Regarding Forward Looking Disclosure
This quarterly report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, adopted pursuant to the Private Securities Litigation Reform Act of 1995. Statements that are not purely historical may be forward-looking. You can identify some of the forward-looking statements by their use of forward-looking words, such as "believes," "expects," "may," "will," "could," "would," "should," "seeks," "approximately," "intends," "plans," "estimates" or "anticipates," or the negative of those words or similar words. Forward-looking statements involve inherent risks and uncertainties regarding events, conditions and financial trends that may affect our future plans of operation, business strategy, results of operations and financial position. A number of important factors could cause actual results to differ materially from those included within or contemplated by such forward-looking statements, including, but not limited to, the status of the economy; the status of capital markets (including prevailing interest rates) and our access to capital; the income and returns available from investments in health care related real estate (including our ability to re-lease properties upon expiration of a lease term); the ability of our borrowers and lessees to meet their obligations to us; our reliance on a few major operators; our dependence on operators for revenue and cash flow; the bankruptcy, insolvency or financial deterioration of our lessees; potential limitations on our remedies when mortgage loans default; competition faced by our borrowers and lessees within the health care industry, public health epidemics such as coronavirus (COVID-19); regulation of the health care industry by federal, state and local governments; changes in Medicare and Medicaid reimbursement amounts (including due to federal and state budget constraints); compliance with and changes to regulations and payment policies within the health care industry; debt that we may incur and changes in financing terms; our ability to continue to qualify as a real estate investment trust; the relative illiquidity of our real estate investments; and risks and liabilities in connection with properties owned through limited liability companies and partnerships. For a discussion of these and other factors that could cause actual results to differ from those contemplated in the forward-looking statements, please see the discussion under "Risk Factors" contained in our Annual Report on Form 10-K for the fiscal year endedDecember 31, 2019 and in our publicly available filings with theSecurities and Exchange Commission . We do not undertake any responsibility to update or revise any of these factors or to announce publicly any revisions to forward-looking statements, whether as a result of new information, future events or otherwise.
Executive Overview
Business and Investment Strategy
We are a self-administered health care real estate investment trust ("REIT") that invests in seniors housing and health care properties through sale-leaseback transactions, mortgage financing and structured finance solutions including mezzanine lending. We conduct and manage our business as one operating segment, rather than multiple operating segments, for internal reporting and internal decision-making purposes. Our primary objectives are to create, sustain and enhance stockholder equity value and provide current income for distribution to stockholders through real estate investments in seniors housing and health care properties managed by experienced operators. 25
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The following graph summarizes our gross investments as of
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Our primary seniors housing and health care property classifications include skilled nursing centers ("SNF"), assisted living communities ("ALF"), independent living communities ("ILF"), memory care communities ("MC") and combinations thereof. ALF, ILF, MC, and combinations thereof are included in the ALF classification. As ofJune 30, 2020 , seniors housing and long-term health care properties comprised approximately 99.3% of our real estate investment portfolio. We have been operating sinceAugust 1992 . Substantially all of our revenues and sources of cash flows from operations are derived from operating lease rentals, interest earned on outstanding loans receivable and income from investments in unconsolidated joint ventures. Our investments in owned properties and mortgage loans represent our primary source of liquidity to fund distributions and are dependent upon the performance of the operators on their lease and loan obligations and the rates earned thereon. To the extent that the operators experience operating difficulties and are unable to generate sufficient cash to make payments to us, there could be a material adverse impact on our consolidated results of operations, liquidity and/or financial condition. To mitigate this risk, we monitor our investments through a variety of methods determined by property type and operator. Our monitoring process includes periodic review of financial statements for each facility, periodic review of operator credit, scheduled property inspections and review of covenant compliance. In addition to our monitoring and research efforts, we also structure our investments to help mitigate payment risk. Some operating leases and loans are credit enhanced by guaranties and/or letters of credit. In addition, operating leases are typically structured as master leases and loans are generally cross- 26 Table of Contents
defaulted and cross-collateralized with other loans, operating leases or agreements between us and the operator and its affiliates.
COVID-19
OnMarch 11, 2020 , theWorld Health Organization declared the outbreak of coronavirus ("COVID-19") as a pandemic, and onMarch 13, 2020 ,the United States declared a national emergency with regard to COVID-19. The COVID-19 pandemic has had repercussions across regional and global economies and financial markets. The outbreak of COVID-19 in many countries, includingthe United States , has significantly and adversely impacted public health and economic activity, and has contributed to significant volatility and negative pressure in financial markets. The operations and occupancy levels at our properties will be adversely affected if COVID-19 or another pandemic results in infections on a large scale at our properties, early resident move-outs, our operators delay accepting new residents due to quarantines, and/or potential occupants postpone moving to a senior housing facility. Additionally, as our operators have responded to the pandemic, operating costs have begun to rise. A decrease in occupancy, ability to collect rents from residents and/or increase in operating costs could have a material adverse effect on the ability of our operators to meet their financial and other contractual obligations to us, including the payment of rent. In recognition of the pandemic impact affecting our operators, we have agreed to rent deferrals for certain operators totaling$0.9 million , approximately 2% of contractual rent, for April throughJune 2020 . Additionally, we granted deferred rent of$0.1 million forJuly 2020 . ThroughJuly 2020 , we have received$0.3 million of deferred rent payments. The remaining balance of deferred rent is due to LTC over the next 24 months or upon receipt of government funds from theU.S. Coronavirus Aid, Relief, and Economic Security (the "CARES Act"). The extent to which COVID-19 could impact our operations and those of our operators will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration, spread and severity of the outbreak and the actions taken to contain the virus or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures. 27 Table of Contents
Real Estate Portfolio Overview
The following tables summarize our real estate investment portfolio by owned properties and mortgage loans and by type, as ofJune 30, 2020 (dollar amounts in thousands): Six Months Ended Percentage June 30, 2020 Percentage Number Number of Gross of Rental Interest of of SNF ALF Owned Properties Investments Investments Income (1) Income Revenues Properties (2) Beds (3) Units (3) Assisted Living$ 880,343 51.6 %$ 36,259 $ - 43.6 % 107 - 6,164 Skilled Nursing 543,825 31.9 % 30,679 - 37.0 % 50 6,283 212 Under Development (4) 10,163 0.6 % - - - % - - - Other (5) 11,360 0.7 % 485 - 0.6 % 1 118 -Total Owned Properties 1,445,691 84.8 % 67,423 - 81.2 % 158 6,401 6,376 Mortgage Loans Skilled Nursing 258,649 15.2 % - 15,597 18.8 % 22 2,804 - Total Mortgage Loans 258,649 15.2 % - 15,597 18.8 % 22 2,804 - Total Portfolio$ 1,704,340 100.0 %$ 67,423 $ 15,597 100.0 % 180 9,205 6,376 Six Months Ended Percentage June 30, 2020 Percentage Number Number of Gross of Rental Interest of of SNF ALF
Summary of Properties by Type Investments Investments Income (1)
Income Revenues Properties (2) Beds (3) Units (3) Assisted Living$ 880,343 51.6 %$ 36,259 $ - 43.6 % 107 - 6,164 Skilled Nursing 802,474 47.1 % 30,679 15,597 55.8 % 72 9,087 212 Under Development (4) 10,163 0.6 % - - - % - - - Other (5) 11,360 0.7 % 485 - 0.6 % 1 118 - Total Portfolio$ 1,704,340 100.0 %$ 67,423 $ 15,597 100.0 % 180 9,205 6,376
(1) Excludes variable rental income from lessee reimbursement and sold
properties.
(2) We have investments in 27 states leased or mortgaged to 29 different
operators.
(3) See Item 1. Financial Statements - Note 2. Real Estate Investments for
discussion of bed/unit count.
(4) Represents a 90-bed SNF development project located in
(5) Includes three parcels of land held-for-use and one behavioral health care
hospital. As ofJune 30, 2020 , we had$1.4 billion in net carrying value of real estate investments, consisting of$1.1 billion or 81.3% invested in owned and leased properties and$0.3 billion or 18.7% invested in mortgage loans secured by first mortgages. Our investment in mortgage loans mature in 2043 and beyond and contain interest rates between 9.2% and 9.9%. For the six months endedJune 30, 2020 , rental income and interest income from mortgage loans represented 77.9% and 20.8%, respectively, of total gross revenues. In most instances, our lease structure contains fixed annual rental escalations and/or annual rental escalations that are contingent upon changes in the Consumer Price Index, which are generally recognized on a straight-line basis over the minimum lease period. Certain leases have annual rental escalations that are contingent upon changes in the gross operating revenues of the property. This revenue is not recognized until the appropriate contingencies have been resolved. During the six months endedJune 30, 2020 , there were no lease renewals. Subsequent toJune 30, 2020 , we consolidated our four leases withBrookdale Senior Living Communities, Inc ("Brookdale") into one master lease and extended the term by one year toDecember 31, 2021 . The master lease provides three renewal options consisting of a four-year renewal option, a five-year renewal option and a 10-year renewal option.
For the six months ended
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received$74.8 million of cash rental income, which includes$8.3 million of operator reimbursements for our real estate taxes. AtJune 30, 2020 , the straight-line rent receivable balance, net of reserves, on the balance sheet was$29.6 million . Update on Certain Operators
An affiliate ofSenior Lifestyle Corporation ("Senior Lifestyle") operates 23 properties under a master lease with a combination of independent living, assisted living and memory care units. Senior Lifestyle was provided partial deferred rent inApril 2020 . However, Senior Lifestyle failed to pay full rent for May and June of 2020. Contractual rent for the quarter was$4.6 million of which we collected$1.8 million . The remaining outstanding accounts receivable balance of$2.8 million is covered by a letter of credit and security deposit totaling$3.6 million . InJuly 2020 , we received$1.1 million of their contractual rent of$1.5 million . In accordance with ASC 842, we evaluated the collectibility of receiving substantially all of our lease payments from the Senior Lifestyle master lease through maturity and determined that we did not have the level of certainty required by the standard. Accordingly, we wrote-off a total$17.7 million of straight-line rent receivable and lease incentives related to this master lease. As a result, we placed Senior Lifestyle on a cash basis effectiveJuly 2020 . We are evaluating our options for the portfolio which may include a combination of re-leasing and selling some or all of the properties.Anthem Memory Care ("Anthem") operates 11 operational memory care communities under a master lease and was placed in default in 2017 resulting from Anthem's partial payment of its minimum rent. However, we did not enforce our rights and remedies pertaining to the event of default, under the stipulation that Anthem achieves sufficient performance and pays agreed upon rent. We currently anticipate that Anthem will pay$9.9 million of annual cash rent during 2020. However, COVID-19 may adversely impact Anthem's operating cash flow and ability to pay rent. In accordance with ASC 842 lease accounting guidance, atJanuary 1, 2019 , we evaluated the collectibility of straight-line rent receivable and lease incentive balances related to Anthem and determined that it was not probable that we would collect substantially all of the contractual lease obligations through maturity. Accordingly, we wrote-off the balances to equity as ofJanuary 1, 2019 , as required by the ASC 842 transition guidance. Anthem is current on rent payments throughJuly 2020 . Anthem is current on rent payments throughJuly 2020 .Preferred Care, Inc. ("Preferred Care") and affiliated entities filed for Chapter 11 bankruptcy in 2017 as a result of a multi-million-dollar judgment in a lawsuit inKentucky against Preferred Care and certain affiliated entities. Preferred Care leased 24 properties ("Properties") under two master leases from us and the Preferred Care operating entities that sublease those Properties did not file for bankruptcy. In accordance with ASC 842 lease accounting guidance, atJanuary 1, 2019 , we evaluated the collectibility of straight-line rent receivable and lease incentive balances related to Preferred Care and determined it was not probable that we would collect substantially all of the contractual lease obligations through maturity. Accordingly, we wrote-off the balances to equity as ofJanuary 1, 2019 , as required by the ASC 842 transition guidance. Preferred Care did not affirm our master leases and subsequently filed for Chapter 7 bankruptcy in 2019. During the fourth quarter of 2019, we entered into multiple contracts to sell the Properties, all of which were completed during the first quarter of 2020. The combined net proceeds from the sales, including the 2019 transactions, was approximately$77.9 million resulting in a total gain of approximately$44.0 million . The Properties had a combined net book value of$35.6 million . The 21 properties sold in the first quarter of 2020, which included 2,411 beds inArizona ,Colorado ,Iowa ,Kansas andTexas , were sold through multiple transactions and generated net proceeds of$72.1 million . These 21 properties had a combined net book value of$29.1 million and resulted in total gain on sale of$44.0 million which was recorded as Gain on sale of real estate, net in the consolidated statements of income and comprehensive income. 29
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Senior Care Centers, LLC and affiliates and subsidiaries ("Senior Care") filed for Chapter 11 bankruptcy as a result of lease terminations from certain landlords and on-going operational challenges inDecember 2018 . Senior Care did not pay usDecember 2018 rent and accordingly, inDecember 2018 , we placed Senior Care on a cash basis. In accordance with ASC 842 lease accounting guidance, atJanuary 1, 2019 , we evaluated the collectibility of the straight-line rent receivable and lease incentive balance related to Senior Care and determined it was not probable that we would collect substantially all of the contractual lease obligations through maturity. Accordingly, we wrote-off the balances to equity as ofJanuary 1, 2019 , as required by the ASC 842 transition guidance. During 2019, we received a court ordered reimbursement from Senior Care for theDecember 2018 unpaid rent, late fees and legal costs totaling$1.6 million . InMarch 2020 , Senior Care emerged from bankruptcy and affirmed our master lease. Senior Care is current on all its rent, real estate property tax escrow and maintenance deposits. Senior Care is current on rent payments through 2020. Subsequent toJune 30, 2020 , we consolidated our four leases with Brookdale into one master lease and extended the term by one year toDecember 31, 2021 . The master lease provides three renewal options consisting of a four-year renewal option, a five-year renewal option and a 10-year renewal option. The notice period for the first renewal option isJanuary 1, 2021 toApril 30, 2021 . The economic terms of rent remain the same as the consolidated rent terms under the previous four separate lease agreements. 30 Table of Contents 2020 Activities Overview
The following tables summarize our transactions during the six months ended
Investment in
Number Type Number Initial Total Total of of of Cash Purchase Transaction Acquisition
State Properties Properties Beds/Units Yield Price
Costs Costs Texas 1 SNF 140 8.5 %$ 13,500 $ 81$ 13,581
Investment in Development and Improvement projects
Developments Improvements Assisted Living Communities$ 4,487 $ 3,039 Skilled Nursing Centers 5,861 14 Total$ 10,348 $ 3,053 Completed Developments Number Type Number of of of Total Properties Property Beds/Units State Investment 1 ALF/MC 78 Oregon (1)$ 18,443 1 78$ 18,443
Certificate of occupancy was received in
to a later date to be determined. Properties Sold Type Number Number of of of Sales Carrying Net State Properties Properties Beds/Units Price Value Gain N/A N/A - - $ - $ -$ 102 (1) Arizona SNF 1 194 12,550 2,229 10,292 Colorado SNF 3 275 15,000 4,271 10,364 Iowa SNF (2) 7 544 14,500 4,886 9,005 Kansas SNF 3 250 9,750 7,438 1,993 Texas SNF 7 1,148 23,000 10,260 12,287 21 2,411$ 74,800 $ 29,084 $ 44,043 (3)
Gain recognized from the
from the holdback under the expected value model per ASC Topic 606, Contracts
with Customers ("ASC 606"). This transaction includes a holdback of$838 which is held in an
interest-bearing account with an escrow holder on behalf of the buyer for
potential specific losses. Using the expected value model per ASC 606, we
(2) estimated and recorded the holdback value of
ended
holdback under the expected value model and recorded an additional gain of
$91 .
(3) Properties sold within the Preferred Care portfolio.
31 Table of Contents Investment in Mortgage Loans
Originations and funding under mortgage loans receivable
(565) Mortgage loan premium amortization (2) Provision for loan loss reserve (20) Net increase in mortgage loans receivable$ 1,970
Investment in
We had a preferred equity investment in an unconsolidated joint venture that owned four communities located inArizona , providing independent living, assisted living and memory care services. During the first quarter of 2020, the four properties comprising the joint venture were sold. Accordingly, we received partial liquidation proceeds of$17.5 million and recorded an additional$0.6 million loss. We anticipate receiving additional proceeds of$1.0 million .
Notes Receivable
Advances under notes receivable$ 611
Principal payments received under notes receivable (2,163) (1) Reclassed to real estate under development
(300) (2) Notes receivable reserve 18 Net increase in notes receivable$ (1,834)
(1) Subsequent to
paydown of a mezzanine loan.
Represents an interim working capital loan related to a development project (2) which matured upon completion of the development project and commencement of
the lease.
Health Care Regulatory Climate
TheCenters for Medicare & Medicaid Services ("CMS") annually updates Medicare skilled nursing facility ("SNF") prospective payment system rates and other policies. OnJuly 30, 2019 , CMS issued its final fiscal year 2020 Medicare skilled nursing facility update. Under the final rule, CMS projects aggregate payments to SNFs will increase by$851 million , or 2.4%, for fiscal year 2020 compared with fiscal year 2019. The final rule also addresses implementation of the new Patient-Driven Payment Model case mix classification system that became effective onOctober 1, 2019 , changes to the group therapy definition in the skilled nursing facility setting, and various SNF Value-Based Purchasing and quality reporting program policies. OnApril 10, 2020 , CMS issued a proposed rule to update SNF rates and policies for fiscal year 2021, which startsOctober 1, 2020 . CMS estimates that payments to SNFs would increase by$784 million , or 2.3%, for fiscal year 2021 compared to fiscal year 2020. CMS also proposes to revise the geographic wage index and apply a cap on wage index decreases used in setting SNF rates. The proposal would also make changes to the patient classifications under the Patient Driven Payment Model and certain minor policy changes to the Value-Based Purchasing program. CMS is expected to release the final rule byAugust 1, 2020 . Since the announcement of the COVID-19 pandemic and beginning as ofMarch 13, 2020 , CMS has issued numerous temporary regulatory waivers and new rules to assist health care providers, including SNFs, respond to the COVID-19 pandemic. These include, waiving the SNFs 3-day qualifying inpatient hospital stay requirement, flexibility in calculating a new Medicare benefit period, waiving timing for completing functional assessments, waiving requirements for health care professional licensure, survey and certification, provider enrollment, and reimbursement for services performed by telehealth, among many others. CMS also announced a temporary expansion of its Accelerated and Advance Payment Program to allow SNFs and certain other Medicare providers to request accelerated or advance payments in an amount up to 100% of the Medicare Part A payments they received from October-December 2019 ; 32
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this expansion was suspendedApril 26, 2020 in light of other CARES Act funding relief. In addition, CMS has also enhanced requirements for nursing facilities to report COVID-19 infections to local, state and federal authorities. OnJuly 23, 2020 , HHS Secretary Azar announced that he had renewed the declared public health emergency-previously set to expireJuly 25 , 2020-for an additional 90-day period. OnMarch 26, 2020 ,President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), sweeping legislation intended to bolster the nation's response to the COVID-19 pandemic. In addition to offering economic relief to individuals and impacted businesses, the law expands coverage of COVID-19 testing and preventative services, addresses health care workforce needs, eases restrictions on telehealth services during the crisis, and increases Medicare regulatory flexibility, among many other provisions. Notably, the CARES Act temporarily suspends the 2% across-the-board "sequestration" reduction during the periodMay 1, 2020 throughDecember 31, 2020 , and extends the current Medicare sequester requirement through fiscal year 2030. In addition, the law provides$100 billion in grants to eligible health care providers for health care related expenses or lost revenues that are attributable to COVID-19. OnApril 10, 2020 , CMS announced the distribution of$30 billion in funds to Medicare providers based upon their 2019 Medicare fee for service revenues. Eligible providers were required to agree to certain terms and conditions in receiving these grants. In addition, theDepartment of Health and Human Services ("HHS") authorized$20 billion of additional funding for providers that have already received funds from the initial distribution of$30 billion . Unlike the first round of funds, which came automatically, providers were required to apply for these additional funds and submit the required supporting documentation, using the online portal provided by HHS. Providers were required to attest to and agree to specific terms and conditions for the use of such funds. HHS expressed a goal of allocating the whole$50 billion proportionally across all providers based on those providers' proportional share of 2018 net Medicare fee-for-service revenue, so that some providers will not be eligible for additional funds. OnMay 22, 2020 , HHS announced that it had begun distributing$4.9 billion in additional relief funds to SNFs to offset revenue losses and assist nursing homes with additional costs related to responding to the COVID-19 public health emergency and the shipments of personal protective equipment provided to nursing homes by theFederal Emergency Management Agency . OnJune 9, 2020 , HHS announced that it expects to distribute approximately$15 billion to eligible providers that participate in state Medicaid andChildren's Health Insurance Program ("CHIP") programs and have not received a payment from theProvider Relief Fund General Allocation. The application deadline for these funds isAugust 3, 2020 . Finally, onJuly 22, 2020 ,President Trump announced that HHS will devote$5 billion in Provider Relief Funds to Medicare-certified long-term care facilities and state veterans' homes to build nursing home skills and enhance nursing homes' response to COVID-19, including enhanced infection control. Nursing homes must participate in the Nursing Home COVID-19 training to be qualified to receive this funding. OnJuly 18, 2019 , CMS published a final rule that eliminates the prohibition on pre-dispute binding arbitration agreements between long-term care facilities and their residents. The rule also strengthens the transparency of arbitration agreements and makes other changes to arbitration requirements for long-term care facilities. There can be no assurance that these rules or future regulations modifying Medicare skilled nursing facility payment rates or other requirements for Medicare and/or Medicaid participation will not have an adverse effect on the financial condition of our borrowers and lessees which could, in turn, adversely impact the timing or level of their payments to us.Congress periodically considers legislation revising Medicare and Medicaid policies, including legislation that could have the impact of reducing Medicare reimbursement for SNFs and other Medicare providers, limiting state Medicaid funding allotments, encouraging home and community-based long-term care services as an alternative to institutional settings, or otherwise reforming payment policy for post-acute care services.Congress continues to consider further legislative action in response to the 33
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COVID-19 pandemic. There can be no assurances that enacted or future legislation will not have an adverse impact on the financial condition of our lessees and borrowers, which subsequently could materially adversely impact our company. Additional reforms affecting the payment for and availability of health care services have been proposed at the federal and state level and adopted by certain states. Increasingly, state Medicaid programs are providing coverage through managed care programs under contracts with private health plans, which is intended to decrease state Medicaid costs. State Medicaid budgets may experience shortfalls due to increased costs in addressing the COVID-19 pandemic.Congress and state legislatures can be expected to continue to review and assess alternative health care delivery systems and payment methodologies. Changes in the law, new interpretations of existing laws, or changes in payment methodologies may have a dramatic effect on the definition of permissible or impermissible activities, the relative costs associated with doing business and the amount of reimbursement by the government and other third-party payors.
Key Performance Indicators, Trends and Uncertainties
We utilize several key performance indicators to evaluate the various aspects of our business. These indicators are discussed below and relate to concentration risk and credit strength. Management uses these key performance indicators to facilitate internal and external comparisons to our historical operating results in making operating decisions and for budget planning purposes. Concentration Risk. We evaluate by gross investment our concentration risk in terms of asset mix, real estate investment mix, operator mix and geographic mix. Concentration risk is valuable to understand what portion of our real estate investments could be at risk if certain sectors were to experience downturns. Asset mix measures the portion of our investments that are real property or mortgage loans.The National Association of Real Estate Investment Trusts ("NAREIT"), an organization representingU.S. REITs and publicly traded real estate companies, classifies a company with 50% or more of assets directly or indirectly in the equity ownership of real estate as an equity REIT. Investment mix measures the portion of our investments that relate to our various property classifications. Operator mix measures the portion of our investments that relate to our top five operators. Geographic mix measures the portion of our real estate investment that relate to our top five states. 34
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The following table reflects our recent historical trends of concentration risk (gross investment, in thousands):
6/30/20 3/31/20 12/31/19 9/30/19 6/30/19 Asset mix: Real property$ 1,445,691 $ 1,438,177 $ 1,484,571 $ 1,474,692 $ 1,452,669 Loans receivable 258,649 256,959 256,659 255,737 254,555 Real estate investment mix: Skilled nursing centers$ 802,474 $ 800,773 $ 853,029 $ 861,500 $ 844,136 Assisted living communities 880,343 876,319 872,683 854,622 851,849 Under development 10,163 6,684 4,158 2,947 - Other (1) 11,360 11,360 11,360 11,360 11,239 Operator mix: Prestige Healthcare (1)$ 271,781 $ 270,091 $ 269,792 $ 268,869 $ 267,688 Senior Lifestyle Corporation 191,622 191,622 191,283 191,283 190,758 Senior Care Centers 138,109 138,109 138,109 138,109 138,109Anthem Memory Care 136,483 136,483 136,484 136,483 136,397
Carespring Health Care Management 102,520 102,520 102,520
102,042 102,038 Remaining operators 863,825 856,311 903,042 893,643 872,234 Geographic mix: Michigan (1)$ 279,821 $ 277,063 $ 276,742 $ 256,680 $ 255,498 Texas 273,075 273,075 284,697 292,238 292,159 Wisconsin 149,403 149,405 149,290 149,184 149,064 Colorado 106,879 106,879 114,923 114,923 114,923 California 104,687 103,970 103,240 102,561 102,412 Remaining states 790,475 784,744 812,338 814,843 793,168
(1) We have three parcels of land located adjacent to properties securing the
Credit Strength. We measure our credit strength both in terms of leverage ratios and coverage ratios. Our leverage ratios include debt to gross asset value and debt to market capitalization. The leverage ratios indicate how much of our consolidated balance sheet capitalization is related to long-term obligations. Our coverage ratios include interest coverage ratio and fixed charge coverage ratio. The coverage ratios indicate our ability to service interest and fixed charges (interest). The coverage ratios are based on earnings before interest, taxes, depreciation and amortization for real estate ("EBITDAre") as defined by NAREIT. EBITDAre is calculated as net income available to common stockholders (computed in accordance with GAAP) excluding (i) interest expense, (ii) income tax expense, (iii) real estate depreciation and amortization, (iv) impairment write-downs of depreciable real estate, (v) gains or losses on the sale of depreciable real estate, and (vi) adjustments for unconsolidated partnerships and joint ventures. Leverage ratios and coverage ratios are widely used by investors, analysts and rating agencies in the valuation, comparison, rating and investment recommendations of companies. The following table reflects the recent historical trends for our credit strength measures: 35 Table of Contents
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